Citadel Federal Credit Union Annual Report 2012

Citadel Federal Credit Union Annual Report 2012
Federally insured by the NCUA.
Table of Contents
A Message from our President and Chairman
1-3
Our Heritage
4
Our Commitment to Community
5
The Best Value for All Your Banking Needs
6
Supervisory Committee Report
Workplace Advantage
7-8
9
Our Pledge to You
10
Looking Forward
11
Financial Information
13-16
1
Citadel Federal Credit Union Annual Report 2012
Jeff March, Citadel President and CEO and Glenn S. Soltis, Chairman of the Board
Citadel Federal Credit Union Annual Report 2012
2
A Message from our President
and Chairman
We are very pleased to report that 2012 was another
increase of 6% more than last year. During 2012, we
outstanding year for Citadel. It was a year of growth,
opened over 70,000 new products for our existing
strength and stability. Citadel’s assets grew by 6%, to
and new customers, and we continued to see strong
over $1.8 billion. We finished the year with a strong
sales growth in several categories, including new
Net Income of $17 million, and a Return on Assets
checking accounts.
of 0.96%. Our Net Worth now exceeds $182 million,
reflecting a Net Worth Ratio of 9.79%, well above the
National Credit Union Administration’s 7% threshold
for a well capitalized credit union. Another indicator
of Citadel’s financial stability is the high quality of our
assets. At the end of 2012, loan balances delinquent
for more than 60 days fell to 0.64% of total balances,
a significant improvement over last year’s ratio
of 1.00%.
In addition to providing our customers with the
products that best meet their needs, we expanded
the ways that our customers interact with us.
We continued to enhance our Online Banking
application, and as a result, we experienced a 38%
growth in customers enrolled in the service.
We introduced Mobile Banking and the response to
this new service has far exceeded our expectations.
In addition, we increased our online presence with
This solid financial performance makes us confident
Web Chat, allowing Citadel representatives to
that Citadel is well positioned for success in the years
have real time contact with visitors to our web site,
to come.
answering questions they may have and offering
We continued to win new customers in 2012,
assistance regarding our products and services.
through a combination of Citadel Class Service,
We are pleased with the customer response to our
superior products and better interest rates. There
electronic delivery channels, and at the same time,
are now 154,000 members banking with Citadel, an
we recognize that many customers still want the
3
Citadel Federal Credit Union Annual Report 2012
physical presence that a local branch office offers.
We work diligently to ensure that Citadel is the stable
We continued to expand our branch network,
and secure financial institution that our customers
opening a new office in Oxford in May. The response
depend on. To navigate through a volatile economic
of the Oxford community to Citadel’s new presence
landscape, we’ve learned to grow, change and adapt.
has been very positive.
And as always, we keep Citadel Class Service at the
What sets Citadel apart from all the others? We stay
focused on the most important things – things that
forefront of all we do. That is our foundation for
continued success in 2013 and beyond.
make a difference not only to our customers, but also
to the communities we serve. Citadel continued to
give back in the form of monetary donations to key
organizations that work hard in making our local
Jeff March
President and CEO
Glenn S. Soltis
Chairman of the Board
communities better places for all who live here. In
addition, our employees volunteered hundreds of
$1,755
$1,514
$1,404
$1,220
Total Assets and Net Worth (in millions)
$2,000
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$1,861
hours in support of various local organizations.
Total Assets
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
Net Worth
2008 2009 2010 2011 2012
“We continue to drive asset growth
while increasing our net worth.”
Jeff March, President and CEO
Total Assets
Net Worth
Citadel Federal Credit Union Annual Report 2012
4
Our Heritage
Citadel was originally established in 1937 as the
Originating from a small employees credit union,
credit union for Lukens Steel, a local steel mill
we are now a great and stable financial institution.
based in Coatesville, Pennsylvania. The employees
Even as we grow and prosper, we value our role as a
of this steel mill helped to build the infrastructure
credit union, focusing on our local communities and
of our country – providing materials used in the
holding on to our rich history.
construction of such iconic American symbols as the
Golden Gate Bridge and the World Trade Towers.
Today, Citadel boasts over 154,000 members and
over 400 partner businesses, organizations and
companies. Our continued success is attributed to
the ideals of striving to provide the best banking
products and the highest quality service to our
customers, their families and our communities.
5
Citadel Federal Credit Union Annual Report 2012
Our Commitment to Community
As a community-based financial institution, Citadel
Citadel employees personally contributed over
takes the philosophy of “people helping people”
$43,000 to the United Way of Chester County in
to heart. We respond to the needs of our community
response to its annual campaign.
and work hard to provide support to the most
deserving organizations. Citadel not only helps the
community with monetary support – we do much
more than that.
Another important community initiative is the
Citadel Heart of Learning Award. In partnership with
the Chester County Intermediate Unit, over the past
11 years, we have honored 165 teachers and awarded
We encourage our employees to give their time
33 winners in the Chester County area with the
and talent during the year to assist community
Citadel Heart of Learning Award. Students, faculty,
organizations that Citadel partners with or a non-
parents and community members nominate these
profit of their choice. Through Citadel’s volunteer
teachers. We look forward to many more years of
program, our employees generously volunteered
honoring our teachers.
hundreds of hours to our partner organizations such
as United Way, Community Volunteers in Medicine,
Good Works, Adopt-a-Highway, Chester County
Library Association, Chester County Food Bank
and the Maternal and Child Health Consortium. In
addition to sharing their time and talent, in 2012,
We work hard to do our part to support and show
our commitment to strengthen our communities
in every way possible, including being an effective
donor to allow our local charities to provide help
where it is most needed.
Citadel Federal Credit Union Annual Report 2012
6
The Best Value for All Your Banking Needs
At Citadel, we offer the products and services to fit your needs, along with friendly,
personalized service you just won’t find anywhere else.
Checking and Savings Products
Investment Services*
Our banking products include checking, savings,
The Investment Team at Citadel is consistently
money market, certificates of deposit and individual
recognized as a high performer within our industry,
retirement accounts. Customers can access these
ranking in the top ten percent nationally. Retirement
products through a variety of on-the-go services
planning and asset management are just a few of the
such as Online Banking and Mobile Banking.
services we provide.
Loan Products
Insurance Services**
Citadel has a full range of loan products with
The Citadel Agency offers a complete array
great low rates. Our loan products include Citadel
of insurance products, including homeowners
MasterCards, personal loans and lines, mortgages,
insurance, auto insurance, renters insurance and
auto loans and home equity loans and lines.
life insurance.
We work hard to keep our promise to deliver superior products and services to our
customers, to provide the smartest and easiest personal banking solutions possible.
7
Citadel Federal Credit Union Board of Directors
Citadel Federal Credit Union Annual Report 2012
Citadel Federal Credit Union Annual Report 2012
8
Supervisory Committee Report
Citadel’s Supervisory Committee is composed of
Board of Directors
Glenn S. Soltis, Chairman
volunteer members who oversee the function of
Lawrence L. Tankeloff, Vice Chairman
Citadel’s professional audit staff and ensure that
Joseph A. Petsko, Secretary
Citadel’s financial strength is fairly represented.
Joseph R. Glace, Treasurer
The diversity of the committee members and
Ravi S. Ganti
their wide variety of backgrounds create a large
Michael S. Givler
Jeffery L. March
knowledge pool. This sharing of knowledge and
Philippe W. Ouellette, Jr.
experience is quite valuable as it increases their
Gary P. Rabik
ability to examine the functions of Citadel in a highly
productive manner. The committee oversees the
Supervisory Committee
Philip A. Priolo, Chairman
internal and external auditors who make sure Citadel
Grant V. Hoffman, Jr., Secretary
is sound and functioning within the guidelines and
Samantha Howland
policies set forth by all governing bodies.
Chaya Scott
Robert C. Vryhof
The 2012 annual audit was completed by the
accounting firm of Reinsel Kuntz Lesher, LLP, and
reviewed by federal examiners as required by
regulation. The results verified that Citadel has
proven to be well managed and ready to meet
the challenges of the future through its strong
financial performance. The National Credit Union
Administration (NCUA) reports that Citadel is in
good financial order and in compliance with federal
regulations.
9
Citadel Federal Credit Union Annual Report 2012
Workplace Advantage
“Of course Citadel provides banking services from checking, loans and retirement
savings plans that you would expect from any bank. Moreover, Citadel’s proven
expertise in all aspects of their business is quintessential. However, it is their service
that towers above all others. Their slogan is much more than just a catchy line. It is
genuine, personal and felt with every encounter that a customer experiences.”
Susan Petley, Chester County Hospital
Corporate Partner since 1987
Citadel is proud to partner with more than
Hospital, Chester County Intermediate Unit, Chester
400 companies and organizations from across
County Hospital, CTDI, Immaculata University,
Southeastern Pennsylvania, providing valuable
Jannsen Biotech Inc., SAP, Siemens, Sikorsky Global
benefits and Citadel Class Service to employees and
Helicopters, Sungard, Transamerica, Weston Solutions
management alike, through Citadel’s Workplace
and World Travel.
Advantage program. Our partners range from small
organizations to major companies, whose employees
turn to us for expert advice and superior financial
products that meet their unique needs. Companies
can join Citadel’s Workplace Advantage program
at no cost and are able to provide their employees
access to all the advantages of banking with Citadel.
With every partnership, Citadel’s dedicated team
coordinates comprehensive marketing and
promotional activities, makes site visits, presents
ongoing financial planning seminars for employees,
and so much more. We’re pleased to have received
very positive feedback from many of our Workplace
Advantage partners and look forward to being a
Citadel’s Workplace Advantage partners include
continued valuable resource for all their financial
such companies as A. Duie Pyle, Aqua America,
needs.
ArcelorMittal Steel, Bentley Systems, Brandywine
Citadel Federal Credit Union Annual Report 2012
10
Our Pledge to You
At Citadel, we’ve created our own customer service
Serving our customers is what we do best. While we
philosophy. Citadel Class Service is our pledge that
offer financial services, our real business is helping
defines our standard for service excellence, and
our customers achieve their dreams and saving them
reinforces our ongoing efforts to achieve the highest
time. We understand. We relate. We want to help
level of customer satisfaction.
our customers live better lives.
We promise to deliver superior banking products
After fulfilling the fiscal requirements of running a
by providing Citadel Class Service. Our passion
financially sound company – such as maintaining
goes beyond merely meeting your banking
the proper capital to protect every investment made
needs. With every interaction we want to exceed
by our customers – Citadel reinvests a significant
your expectations, making you a highly satisfied
amount of earnings back into the business, ensuring
customer.
that we can provide even greater value in the
As part of our pledge, we follow four Pillars. The
Pillars detail the most important elements of our
customer service pledge.
Accuracy: To always produce high quality work,
given any opportunity.
Convenience: To make life easier for our customers.
Respect: To appreciate our customers, colleagues
and our organization.
Value: To continuously work to build and better our
customer relationships.
products and services we offer.
This is how Citadel is different.
11
Citadel Federal Credit Union Annual Report 2012
Looking Forward
As we reflect on our activities over the past year, we
As we grow and expand, we are committed to
also look ahead to what the future will bring.
finding ways to be more efficient internally to better
Our new Glen Mills branch office will open in 2013.
We are excited to open our third branch office in
Delaware County and look forward to bringing
Citadel Class Service to members of the surrounding
communities.
serve our customers. We will continue to focus on
internal processes and find the best ways to utilize
technology. This goes hand-in-hand with how we
will serve customers in a non-branch office setting.
The way we deliver services electronically will
become more and more important in the near future.
We will continue to explore opportunities to expand
our geographic reach, and evaluate potential new
locations, with particular focus in Montgomery
County. As we enlarge our reach, we are able to
serve more and more customers and communicate
our story about the many benefits and value of
banking with Citadel.
Citadel is one of the largest financial institutions
headquartered in this region, but we hold true to
our local and historical roots. We care about our
customers and about our communities, because
without them, we wouldn’t be where we are today.
Financial Information
13
Statement of Financial Condition
Citadel Federal Credit Union Annual Report 2012
2012
2011
Assets
Loans
Auto
$590,825,982 $548,092,419
Unsecured
120,251,252
117,367,850
Real Estate
586,604,186
539,976,461
98,850,682
107,115,006
4,579,932
5,366,855
Business Loans
Other
Total Loans
Allowance for Loan Losses
$1,401,112,034 $1,317,918,591
(10,033,723)
(12,841,576)
1,391,078,311
1,305,077,015
-
13,406,292
CMOs
139,329,915
187,389,700
Mortgage Backed Securities
142,241,388
65,653,109
5,030,251
5,575,356
Cash and Cash Equivalents
81,615,703
86,087,050
Fixed Assets
55,351,780
55,724,126
NCUSIF
15,249,849
13,452,592
Other Assets
31,048,606
22,678,073
Net Loans
Agency Bonds
Other Investments
Total Assets
$1,860,945,803 $1,755,043,313
Liabilities and Equity
Deposits
Savings
$199,574,249 $155,163,450
Checking
215,021,495
180,599,949
Money Market Accounts
466,287,494
421,625,119
Certificates
754,810,509
791,021,082
Total Member Deposits
Accounts Payable
Borrowed Funds Payable
Dividends Payable
Equity
Total Liabilities/Equity
$1,635,693,747 $1,548,409,600
7,651,211
6,696,479
30,000,000
30,000,000
7,533
21,107
187,593,312
169,916,127
$1,860,945,803 $1,755,043,313
Citadel Federal Credit Union Annual Report 2012
14
Statement of Income
2012
2011
Operating Income
Loan Interest Income
$
Investment Income
61,444,889
$
65,583,456
6,354,769
8,150,994
Total interest Income
67,799,657
73,734,449
Dividend Expense
16,545,968
17,154,422
834,989
853,495
17,380,957
18,007,917
Borrowed Funds Expense
Total Interest Expense
Net Interest Income
$
Provision for Loan Losses
Net Interest Income After Provision for Loan Losses
4,808,776
$
Other Operating Income
Net Operating Income
50,418,700 $
45,609,924
55,726,532
6,483,217
$
23,457,341
49,243,315
21,772,036
$
69,067,266
$
71,015,351
$
27,306,973
$
25,612,768
Operating Expenses
Employee Compensation & Benefits
Marketing
4,301,442
3,888,395
10,645,023
10,547,746
Loan Servicing Expenses
3,595,656
3,458,020
Professional and Outside Services
7,527,893
6,455,895
901,042
775,241
General Office Occupancy & Expenses
Misc. Operating Expenses
Total Operating Expenses
$
Non-Operating Gains / Losses
NCUSIF
Net Income
$
54,278,028
$
50,738,065
4,051,916
1,234,795
(1,448,736)
(3,363,148)
17,392,417 $
18,148,932
15
Citadel Federal Credit Union Annual Report 2012
Statement of Cash Flow
2012
2011
Cash Flow From Operating Activities
Net income
$
17,392,417 $
18,148,932
Adjustments to reconcile net income to net cash from
operating activities
Depreciation and amortization
3,463,436
2,899,522
Amortization of investment premiums, net
8,812,503
2,785,190
(2,807,853)
(754,504)
547,511
82,879
(3,304,701)
(1,544,839)
(3,767,773)
2,401,163
Excess of provision for possible loan losses over net
loans charged off
Change in assets and liabilities
(Increase) decrease in assets:
Accrued interest receivable
Prepaid expense and other assets
Increase (decrease) in liabilities
Accounts payable and accrued expense
Net Cash Provided By Operating Activities
$
20,335,541 $
24,018,343
$
45,301,955 $
38,000,000
Cash Flows From Investing Activities
Proceeds from maturity, call, and sale of investments
Purchase of investment securities
(154,527,665)
(164,443,845)
85,575,775
33,404,333
(83,193,443)
(101,653,073)
Increase in NCUSIF deposit
(1,797,257)
(940,686)
Expenditures for property and equipment, net
(3,450,400)
(7,090,832)
Principle received on mortgage backed securities
Net increase in loans
Net Cash Used In Investment Activities
$
(112,091,035) $
(202,724,103)
$
0 $
0
Cash Flows From Financing Activities
Net increase in borrowed funds
Net increase in deposit accounts
87,284,147
222,761,420
Net Cash Provided By Financing Activities
$
87,284,147 $
222,761,420
Net Increase (Decrease) in Cash and Cash Equivalents
$
(4,471,347) $
44,055,660
Cash and Cash Equivalents at Beginning of Year
$
86,087,050 $
42,031,390
Cash and Cash Equivalents at End of Year
$
81,615,703 $
86,087,050
Citadel Federal Credit Union Annual Report 2012
46+A29+1312
Composition of Deposits
Real Estate
49%
Auto Loans
42%
Credit Cards
7%
Unsecured
2%
Other Loans
<1%
29%
Checking
13%
Savings
12%
$1.4
$1.2
$1.0
$0.8
$0.6
$1.3
$1.1
$1.2
$1.3
$1.2
$1.6
$1.6
$1.0
Money Market
$1.5
$1.4
$1.4
$1.8
$0.6
$0.4
$0.4
$0.2
$0.2
2012
Composition of Assets Under Management
2008
2009
2010
2011
2012
Assets Under Management (in millions)
Variable Annuity
32.5%
Managed Accounts
31.5%
Mutual Funds
25.5%
$350
$300
Stocks and ETFs
4.8%
$250
Fixed Annuities
4.2%
Other
1.5%
$200
$317
2011
$150
$100
$50
$256
33+A31+25542
2010
$218
2009
$170
2008
$114
$0.8
46%
Total Deposits (in billions)
$1.6
$1.0
Certificates
$1.2
Total Loans (in billions)
$1.1
49+A42+720
Composition of Loans
16
2008
2009
2010
2011
2012
For more information on the services that Citadel
offers, stop by our nearest branch office, call us
at (800) 666-0191 to speak with one of our
customer service representatives or email us at
[email protected]
Visit Citadel online at CitadelBanking.com
*Non-deposit investment products and services are offered through CUSO Financial
Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC
Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF
or otherwise federally insured, are not guarantees or obligations of the credit union,
and may involve investment risk including possible loss of principal. Investment
Representatives are registered through CFS. Citadel has contracted with CFS to make
non-deposit investment products and services available to credit union members.
**INSURANCE PRODUCTS: Are not deposits of, guaranteed by or insured by Citadel,
the NCUA or any Federal Government Agency, are obligations of the issuing
insurance company, which is not affiliated with Citadel. Insurance products are
offered through the Citadel Agency, LLC a licensed insurance agency affiliated with
Citadel. The Citadel Agency, LLC will receive compensation if you choose to purchase
coverage through this program. A decision to purchase insurance coverage will not
affect the cost or availability of any loan product or service offered by Citadel.
Brookhaven | Chadds Ford | Chester Springs | Downingtown | Eagle | Lancaster | Oxford
Paoli | Parkesburg | Phoenixville | South Coatesville | Springfield | Thorndale | West Chester
(800) 666-0191
CitadelBanking.com